Mixing sales channels to reach small businesses

* Bandwidth.com and CompUSA tag team for Internet telephone sales

Vendors love small businesses because there are millions of them. But they hate small businesses because those millions of companies are in millions of locations. Retail chains with extensive reach don't usually have the expertise to sell technical products, but driving millions of businesses to one Web location takes huge amounts of inefficient marketing dollars. So Bandwidth.com and CompUSA decided to tag team and try to solve the small business sales riddle.

You know CompUSA if you're close to one of their nearly 250 locations. You may not know they have over 1,100 commercial sales reps leveraging their retail presence with outbound sales to small businesses. Each store keeps one commercial rep on the floor each day for walk-in traffic.

But no sales rep can provide detailed knowledge about a product line as wide as CompUSA's, so small business customers may not find a salesperson knowledgeable about a current problem. Add in a new technology, like VoIP phones, and the knowledge gap widens.

Bandwidth.com, however, knows all about data services and VoIP phone systems. Its new deal with CompUSA starts with the addition over the next months of company collateral on the sales floor, such as kiosks. When a customer asks a salesperson about VoIP, that salesperson can call up the dedicated CompUSA support group at Bandwidth.com (over VoIP, of course).

Bandwidth.com CEO Henry Kaestner started the company in 1999 to provide better data and telephone service to small businesses. Kaestner defines better service as "a complete telecom offering, guaranteed best pricing, service, accountability, real time tracking of installations just like FedEx gives for package delivery, and a 99.3% customer retention rate." The last bit is his favorite stat, for good reason in a business marked by customers always looking for a better deal.

Direct sales from the company’s Atlanta office works, but its reach is limited by having only 19 salespeople out of 75 total employees. Kaestner made a deal with CDW a couple of years ago to leverage its 2,000 salespeople. The new deal with CompUSA should help Bandwidth.com reach even smaller businesses who buy technology from retail outlets.

CompUSA commercial sales reps will be able to give customers a ballpark price for a new Internet-based phone system. They can show them phones, explain the technology, and answer standard network questions. When the customer gets serious, the CompUSA rep calls the Bandwidth.com team for the rest of the story. Together they work out site survey and installation details.

Many small businesses opt for Bandwidth.com's hosted phone services. Its main data center in Atlanta sits at a major node for wholesale bandwidth provider Level 3. Customers can tie their existing phone equipment to the network, or opt to replace the old with new intelligent Internet phones.

If all works neatly, CompUSA will sell the hardware and local installation while Bandwidth.com and back-end service company Sylantro Systems will get the ongoing service revenue. The customer will primarily deal with CompUSA, adding the local touch and continuing support presence for other technical issues (CompUSA calls its support people Techknowledgists, which borders on too cutesy for me).

I don't know how this will work with CompUSA's support of local installation and service firms. I don't know if customers will feel like a ping pong ball between CompUSA and Bandwidth.com.

To avoid these problems, CompUSA needs to handle this project neatly and professionally from the beginning. Good intentions break down if the local retail store doesn't make constant efforts to improve customer service. The problem with partnerships is your partner can stumble but the egg lands on your face.

These types of concerns aside, I believe analysts will predict partnerships of this type will start to squeeze out local resellers. Joe's Networks may be a dozen great service people, but they can't beat 250 CompUSA stores. On the other hand, Joe and the guys have been targeted for extinction by every large vendor for the past two decades, yet they're still going strong. I bet CompUSA and Bandwidth.com will be relying on all the Joe's Networks out there more in the coming two years than they expect, which will be a good deal all around for their small business customers.

Copyright © 2006 IDG Communications, Inc.

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